5/19/2016

The Changing Art Market

The NY Times ran an interesting article on the changing art market. It looks at the declining sales, such as the May NYC auctions selling $560 million vs. $1 billion in 2015. Experts state the market is shrinking, and while quality works are available there is a reticence on the part of auction houses to guarantee sales. With that, fewer strong works become available.

The NY Times reports

The numbers tell a clear enough story. Last week, Christie’s and Sotheby’s evening auctions of contemporary art in New York — the events by which the wider world takes the temperature of the art market — raised a total of $560.6 million. Last year, the equivalent auctions took in $1 billion.

And the $78.1 million total from Christie’s quirkily themed May 8 auction of contemporary works, “Bound to Fail,” was a fraction of the $705.9 million the company grossed last May at its blockbuster 20th-century “Looking Forward to Tomorrow” sale. Phillips’s $46.6 million sale of 20th-century and contemporary art at its May 8 evening sale was also way down on the $127.9 million it generated from contemporary art 12 months ago.

“The market has definitely shrunk,” said Wendy Cromwell, an art adviser in New York. “But that isn’t a result of sellers not wanting to sell in an uncertain market, but of a lack of spectacular guarantees” that flush out the best works. “There’s a cause and effect,” she added, explaining the absence of big-ticket works in last week’s auctions.

With Christie’s and Sotheby’s more mindful of the bottom line than they were in 2015, upfront offers to sellers were reined in and no work was valued at more than $40 million.

Still, given the climate of uncertainty, the auction houses had some reasons for optimism. On May 10, Christie’s sold a Jean-Michel Basquiat painting for $57.3 million, an auction high for the artist, and the following evening Sotheby’s, which has seen an exodus of expertise since its surprise acquisition in January of the New York firm Art Agency, Partners, reassured investors with a seemingly solid total of $242.2 million, with 95 percent of the lots selling.

Beyond the numbers, here are some of the week’s main themes.

Top ‘Imps & Mods’ Were Scarce

The absence of a Picasso or Modigliani guaranteed at $100 million not only shrunk the top line, but also exposed a shortage of quality in the “Imps & Mods” market. Sotheby’s and Christie’s evening sales in this once-dominant category brought in a combined $286 million, half what the houses raised last May.

“There just isn’t the quality left out there any more. All the great pictures are in museums,” said the London dealer Alan Hobart, who was at Christie’s Impressionist and modern evening sale on May 12 to see a square 1919 Monet, once part of a rectangular waterlily canvas, sell for $27 million, the top Impressionist price of the week.

Pre-1950s gems still come up for auction, but they tend to be tucked away among the day sale works on paper. On May at Sotheby’s, for example, the powerful 1907 Picasso pencil drawing “Tete de femme,” once owned by Gertrude Stein, sold above the high estimate for $490,000.

And on Friday at Christie’s, a circa 1910 Modigliani pencil drawing, “Tete de cariatide,” was pushed by at least half a dozen bidders to $1.6 million, more than double the high estimate.

Choosy Buyers

There were few standout trophies in the contemporary sales. Predictably, plenty of attention was generated by the presence of one of four versions of Maurizio Cattelan’s 2001 “HIM” — a waxwork of Hitler reimagined as a kneeling schoolboy — in Christie’s “Bound to Fail” auction.

The sculpture had been entered, without a guarantee, by the hedge fund manager David Ganek with what had seemed to be an ambitious estimate of $10 million to $15 million. But at least three bidders pushed the price up to $17.2 million, an auction high for the artist. There was immediate speculation that the mystery buyer might be the auction house’s owner, Francois Pinault, who in 2009 sold the version he owned. Mr. Pinault’s office said by email that he was not the buyer.

The week’s top result was undoubtedly the $57.3 million paid on May 10 at Christie’s by the Japanese Internet billionaire Yusaku Maezawa for the monumental 1982 Basquiat canvas, “Untitled,” featuring a self-portrait as a horned devil. Entered by the New York dealer-collector Adam Lindemann, and certain to sell for at least $40 million, courtesy of a third-party guarantee, this much-vaunted painting — and its price — indicated to many that contemporary art is far from slumping into a true “down” market.

Mr. Maezawa, 40, is the founder of the online fashion mall Zozotown and is hoping to open a private museum. He spent almost $98 million on contemporary art last week.

“They were lucky to get that Japanese client; otherwise, it could have been a different story,” said Judith Selkowitz, another adviser in New York. “But the fact is there’s still a lot of money around. Buyers are just a lot more selective. It’s good to rebalance, and it’s healthy that everything isn’t running away.”

Where Are the Profits?

The challenge for the action houses is to convert the hundreds of millions the wealthy spend on contemporary art into profits for themselves. The $242.2 million with fees that Sotheby’s took from its 44-lot sale on May 11 — against a low estimate of $201.4 million — seemed on paper to be a success. The total was 24 percent less than the $318.4 million achieved by Christie’s the previous night, compared with the 42 percent gap in market share at the sales last year. Sotheby’s was the sole guarantor of just five lots, with a total minimum value of $15.5 million, and all found buyers.

But four works in the sale had been entered by the hedge fund manager Daniel Sundheim as part payment for a Cy Twombly “blackboard” painting he had bought for $70.5 million at Sotheby’s back in November, Bloomberg reported. One of them, Twombly’s “Untitled (Bacchus 1st Version V)” from 2004, sold for $15.4 million, but it had been estimated at $20 million, and another, a 1990 Christopher Wool word-painting fell to a single bid from Mr. Maezawa at $13.9 million, again below expectations.

The arrangement with Mr. Sundheim reflects Sotheby’s willingness to expand into art-related financial services, and for the moment, investors seem to approve of this strategy. At the end of trading on Tuesday Sotheby’s stock was priced at $27.74, significant recovery from the $19.13 that it plumbed in February.

“They weren’t great sales, but in terms of the percentages sold, they did well,” said the London dealer James Holland-Hibbert, who noted a new sobriety in the auction market for 20th- and 21st-century art.

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The Appraiser Workshops blog was developed in 2008 to publish news connected with the personal property profession and to promote the Appraiser Workshops. Content includes appraisal ideas and tips, industry news and events, market trends and updates, surveys, educational opportunities and general commentary about personal property appraising. Visit often. Comments, news, suggestions and content contributions are always welcome.

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Todd W. Sigety, is a certified member of the International Society of Appraisers and is a partner in the Appraiser Workshop, developers of the Good, Better, "Best" Appraiser Workshop. He owns two Antique galleries in Old Town Alexandria, VA where the workshop is held. He currently serves as the President on the National Board of Directors for the International Society of Appraisers. He is also the creator and editor of the Journal of Advanced Appraisal Studies.

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